HSBC Raid Spells Trouble For U.S. Citizens Worldwide

It is no secret that the United States has begun to “drop the hammer” on those who are keeping undeclared foreign bank accounts. Although some would even say that the penalties for those that do not disclose the existence of their account abroad using the Offshore Voluntary Disclosure Program are draconian, one thing is certain: the days of stashing your money away in a foreign country with bank secrecy laws without severe domestic consequences are over. And it’s not just America that those with undeclared accounts must worry about. The rest of the world has taken up the fight against secret bank accounts and much like the United States, this issue isn’t showing any sign of letting up.

The Raid on HSBC in Buenos Aires

Just last week, local offices of HSBC in Buenos Aires were raided by law enforcement officials in an attempt to gather evidence related to the concealment of monies in overseas bank accounts. According to a court source, the investigation involves over 4,000 Argentinians and their Swiss accounts allegedly established and maintained by HSBC, a British bank.

This was likely not a shock to HSBC, as it had charges filed against it in November of 2014 related to assisting Argentinian citizens evade taxes by transferring their assets to foreign accounts that the Argentinian tax agency (AFIP) was unaware of. Unsurprisingly, HSBC made a statement regarding the charges where it generally denies any wrongdoing.

A Threat To Americans Everywhere

Whether HSBC broke any laws in Argentina is really beside the point. What U.S. taxpayers should glean is that the rest of the world is starting to wage war against undeclared bank accounts in foreign jurisdictions. There are good portions of Americans that hold dual citizenship and have concluded that if they deposit money in a foreign jurisdiction using the passport of their second country, they will not be detected by the U.S. This couldn’t be further from the truth.

As other nations ramp up their fight against undeclared foreign bank accounts, we are approaching a reality where your citizenship is inconsequential. Whether you are a citizen of Italy, Spain, Argentina, or any other foreign jurisdiction and you open or maintain a foreign bank account that is unknown to any taxing jurisdiction that requires its disclosure, it is not an issue of if you will be detected, but rather when you will be detected. And if you are a dual citizen, you will have double the legal trouble. Most countries have treaty agreements that direct the sharing of information between treaty countries in order to aid IRS criminal tax investigations. Therefore, it is likely that if you have a criminal tax issue in one country, you will have one in both.

A Way Out

The most logical step to avoid this type of scenario is to come forward. Making an offshore voluntary disclosure avoids the very real possibility of facing time behind bars in a United States federal prison. If that’s not a deterrent, there’s more. If you are found to have willfully failed to disclose your foreign bank account to the IRS, you are also liable for fines and penalties that can exceed the amount in your foreign account by more than double.

Luckily for citizens with undeclared foreign bank accounts, there is a way out, at least for now. The IRS has the authority to create programs that will let Americans come clean with their foreign accounts and avoid some of the most negative aspects of being criminally tried for tax evasion and willfully failing to disclose your bank account. The Offshore Voluntary Disclosure Program (which is temporary in nature) in effect, grants a taxpayer protection from criminal charges if they (1) qualify for the program and (2) follow all of the program’s steps.

The Harsh Reality of the Worldwide Crackdown on Undeclared Accounts

One of the most troubling aspects of the HSBC raid out of Buenos Aires, as well as other similar stories, is that it demonstrates that the risk of Americans that have accounts in banks around the world may become ineligible for the OVDP. One of the main qualifications of the program is that the IRS cannot be investigating you for any reason. Therefore, if another country’s taxing authority hands over incriminating documents about your tax activity and the IRS opens up an investigation or an audit of your taxing activity here, the opportunity to participate in the OVDP is gone. This harsh reality evidences the need to come forward and begin the initial stages of participation in the OVDP sooner rather than later.

The OVDP can sometimes be tricky to participate in alone. There are various documentation requirements that many taxpayers struggle to make sense of alone. That’s where an experienced tax attorney comes in. A professional that knows how to navigate the tricky waters of filing an FBAR, the OVDP and other IRS related issues can be the difference between sitting behind bars and enjoying your physical and financial freedom with your family.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have years of experience assisting taxpayers in various matters before the IRS, including extensive work with the Offshore Voluntary Disclosure Program. Without a trustworthy and effective advocate in your corner, going up against the IRS or the Department of Justice can result in a knock out with life-altering consequences. Contact the Tax Law Offices of David W. Klasing today for a reduced rate consultation at 800-681-1295.

HSBC Raid Spells Trouble For U.S. Citizens Worldwide was last modified: March 11th, 2016 by David Klasing

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